Registering a RAIF in Cyprus in 2025

1. Why register a RAIF in Cyprus?

From an economic perspective, Cyprus is thriving in the financial industry, evolving into a global financial hub that offers a broad spectrum of investment, payment, and crypto-asset services. A key contributor to this upward trajectory is the growth of RAIFs, driven by several strategic advantages. These include a modern and transparent regulatory framework grounded in common law, supported by professional service providers offering high-quality services at competitive rates. RAIFs benefit from the ability to establish business relationships with credit and financial institutions regulated under European legislation and supervised by the Central Bank of Cyprus. Moreover, they are overseen by EU-based AIFMs, which enable them to leverage the EU passporting framework to market their funds across the Union without requiring individual authorisation from each member state’s national competent authority. Cyprus also offers a business-friendly tax regime, boasting one of the lowest corporate tax rates in the EU and imposing no withholding tax on dividend distributions. Non-resident investors further benefit from Cyprus’s extensive network of double tax treaties. Lastly, RAIFs have the flexibility to appoint a range of entities as depositaries, including investment firms, credit institutions, or other regulated entities, making them an attractive vehicle for fund structuring in the European financial landscape. 

2. What are the key features of a RAIF?

The following compile the specific and flexible operational features of a RAIF model: 

• Can be legally formed as:
  • a common fund
  • an investment company with variable or fixed capital
  • a limited partnership.
• Can be closed-ended or open-ended.
• Unlike an AIF, no licensing is required; CySEC supervises the external AIFM appointed that oversees RAIF’s compliance with the relevant laws and regulations. 
• Can be structured as an umbrella fund with multiple investment compartments following different investment strategies.
• Is subject to no minimum capital requirements.
• No limitations apply to the amount of Assets Under Management (AUM).
• However, the minimum amount of AUM to be raised within the first 12 months equals €500,000.
• Can subscribe an unlimited number of professional and well-informed investors.
• Must be always externally managed.
• Must appoint a depositary.
• Is subject to no investment restrictions except being set up as a:
  • Fund of Funds
  • Money Market Fund
  • Loan Origination Fund.

3. What does the Alternative Investment Fund Manager do?

The establishment of a RAIF requires the appointment of an external AIFM that is duly authorised and supervised either by CySEC or any other National Competent Authority (NCA) within the European Union, thereby reinforcing the fund’s EU substance. Unlike the conventional licensing process, the responsibility for registering the RAIF lies with the appointed AIFM, streamlining the setup procedure. CySEC’s role is to assess whether the AIFM holds the necessary authorisation to manage an AIF in line with the investment strategy proposed for the RAIF. If the criteria are met, CySEC proceeds with the registration of the RAIF in the official registry and duly notifies the AIFM. The registration process is designed to be efficient, with completion expected within one month from the date the AIFM submits all required documentation and information.

In this context the AIFM is responsible for:

• Preparing and collecting all the required documentation for the RAIF’s registration.
• Submitting a well-supported application to CySEC.
• Ensuring compliance for all RAIF’s operational and marketing activities.
• Overseeing all reporting and regulatory matters.
• Handling the onboarding procedure of investors and completing the Know-Your-Customer (KYC) process.
• The assignment of:
  • the depositary
  • the fund administrator
  • the investment advisor (if applicable)
  • any delegated contracts such as the Anti-Money Laundering (AML) compliance of the fund.

Therefore, in the eyes of the regulator, the AIFM is considered the person ultimately responsible for the supervision of RAIF’s activities and operations and confirming compliance with the AIF Law.

4. What does the Depositary do?

As mentioned above, the responsibility for the appointment of each RAIF’s depositary lies with its external fund manager. It is of great importance that the duties of the depositary are clearly segregated from those of the external fund manager and each role is performed by a different person.

The depositary shall always act in an honest, fair and professional manner and in the interest of the RAIF and its unitholders. Additionally, the depositary is responsible for:

• monitoring the RAIF’s cash flows,
• safeguarding and verifying ownership of RAIF’s assets,
• verifying ownership of other assets,
• verifying the Net Asset Valuation (NAV) calculations,
• issuing and redeeming RAIF’s units,
• ensuring investment compliance.

The type of entity appointed as a depositary depends on the amount of assets held by the RAIF, as long as the below thresholds are not exceeded:

• €100,000,000 including leveraged acquired assets, or
• €500,000,000 employing no leverage and the unitholders having no redemption rights for 5 years.

Based on the above thresholds, an appointed depositary can be a credit institution, an investment firm governed by MiFID Regulation, an entity supervised as a depositary, or an entity performing depositary functions in the context of its professional and business activities as recognised by the law.

In case the RAIF holds assets, which exceed the above-mentioned thresholds, the appointment of the depositary is limited to a credit institution.

In addition to the above, here is more information on the depositary’s role and requirements.

5. How can SALVUS support your RAIF registration?

The SALVUS Investment Funds Licensing team possesses deep expertise and comprehensive experience in the licensing, authorisation, and registration of Investment Funds, along with their ongoing regulation and administration. Leveraging a structured project management methodology, our team works closely with you to identify the optimal fund type and structure that align with your strategic goals and business model.  

We are committed to ensuring the smooth and timely preparation of your application, while also providing continuous support in meeting your regulatory requirements, ranging from internal audit and risk management to compliance functions, ensuring your fund remains aligned with applicable legal and supervisory standards.  

Do not hesitate to contact us at info@salvusfunds.com if you require additional information on registering a RAIF or to discuss the needs of your investment fund.

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The information provided in this article is for general information purposes only. You should always seek professional advice suitable to your needs.